What happened this morning at the court that "few people know about" and the ruling on "presidential overreach"? What does it mean for Trump's trade war?

U.S. Court Halts Trump's Tariff, What Did It Specifically Say?

According to CCTV News, on May 28 local time, the U.S. International Trade Court blocked the tariff policy announced by President Trump on April 2 from taking effect, ruling that Trump overstepped his authority by imposing comprehensive tariffs on countries that export more to the U.S. than they import.

The three judges, appointed by Reagan, Obama, and Trump himself, unanimously ruled that the president abused emergency powers and crossed constitutional lines. If Trump fails in his upcoming appeal, the trade war he initiated will come to an abrupt halt within 10 days.

Subsequently, the White House quickly responded strongly, stating it would use "every lever of executive power" to counter this ruling by an "unelected judge."

"Reciprocal Tariffs" Suspected of Multiple Illegality

The U.S. International Trade Court has ruled that the high tariffs imposed by President Trump shortly after taking office on multiple countries are illegal. This ruling involves two consolidated cases—V.O.S. Selections v. United States and Oregon v. Department of Homeland Security.

In this ruling, the court made four important conclusions:

Limited Presidential Power under IEEPA

The court found that the 1977 International Emergency Economic Powers Act (IEEPA) does not grant the president "unlimited tariff authority." Trump does not have the authority to impose tariffs on any country, for any amount, indefinitely. If the law truly granted the president such broad powers, it would violate the constitutional principle of separation of powers.

Strict Limits on Tariffs Targeting Trade Deficits

Trump imposed tariffs under the pretext of addressing trade deficits, but the court pointed out that Section 122 of the Trade Act of 1974 clearly states that tariffs targeting trade deficits can only reach a maximum of 15% and cannot exceed 150 days.

Tariffs Failed to Address "Special Threats"

The court also dismissed Trump's claim that tariffs could curb the influx of illegal drugs, stating that tariffs did not directly prevent any drugs from entering the country but were merely a diplomatic strategy to pressure other countries, which does not meet the "response" emergency requirements set forth by the IEEPA.

National Permanent Injunction

The Constitution requires that “tariffs and taxes must be uniform throughout the United States,” therefore the court has permanently prohibited the implementation of these tariffs nationwide.

What Happens Next?

Appeal Battle Has Begun

Recent news indicates that following the ruling, the Trump administration has immediately submitted an appeal plan to the Federal Circuit Court. This case will typically first be appealed to the U.S. Court of Appeals for the Federal Circuit and may ultimately be sent to the Supreme Court.

"Reciprocal Tariffs" Face 10-Day Countdown to Expiration

The court stated that “necessary administrative orders to enforce the permanent injunction will be issued within 10 calendar days.” If there is no intervention from a higher court by then, the "reciprocal tariffs" policy will expire.

Government Seeks Emergency Stay + Alternative Tariffs

According to Ted Murphy, a trade attorney at Sheppard Mullin, in addition to the appeal, the government may seek an emergency stay of the court's ruling and initiate alternative tariffs under other laws.

Some Tariffs Unaffected

It is worth noting that this ruling does not affect tariffs imposed by the Trump administration under other legal authorities, including tariffs on steel, aluminum, and automobiles, as well as Trump's threats to impose tariffs on drugs, semiconductors, and other critical products.

Has Trump Lost His "Bargaining Chip"? Trade Situation Remains "Uncertain"

Since April, the Trump administration has been using "reciprocal tariffs" as a bargaining chip to push trade negotiations with about 18 countries. Now, this situation is forced to reach a turning point U.S. Trade Representative Jamieson Greer warned that if the court rules against the government, it will hinder its efforts to negotiate trade agreements with other countries.

Everett Eissenstat, a partner at Squire Patton Boggs, also stated that the ruling "greatly impacts the recent dynamics of the president's tariff and trade agenda."

As the court challenges Trump's tariff powers, the market will closely monitor the appeals process and the possible emergency intervention by the Supreme Court. It is expected that global trade policy will remain uncertain until a decision is made by a higher court.